Banks edge closer to instant payments

Three of Australia’s big four banks have begun rolling out their new $1 billion payment system that allows customers to transfer funds between rival institutions in near real-time.

Customers will be able to pay tradies or transfer cash to family and friends almost instantly, bringing the financial services sector into line with digital payments in other sectors like e-commerce and retail.

“This will give consumers new levels of personalisation and innovation not seen before in Australia,” Westpac general manager Di Challenor said.

“Payment delays of up to three days can be a real pain point for customers.”

Westpac, Commonwealth Bank, and National Australia Bank began limited use of the system on Tuesday, while ANZ is holding off while it undertakes further “rigorous testing” of the platform.

CBA said it has opened the NPP to 130,000 customers, while Westpac said it will be phasing in access to an initial “small group” of consumer customers.

“The security of our customer data is paramount and we are committed to ensuring our customers have a safe experience,” Ms Challenor said.

The system has been in development for six years by government, the RBA and 13 financial institutions including the four major banks.

The lenders faced criticism on Monday’s opening day of the industry royal commission when they said they would miss the deadline to hand over information on misconduct to commissioner Kenneth Hayne.

Adrian Lovney, chief executive of the so-called New Payments Platform, said the world-leading technology follows the rapid growth in mobile and digital payments.

BPAY chief executive John Banfield said users will eventually be able to transfer money instantly via their phone as services and products become available on the platform.